Innovative Clean Energy Financing for Local Governments

Yolo County developed a cost-effective solution to eliminate its energy bills, generate money for its general fund and reduce the need for budget cuts by installing solar photovoltaic systems on municipal buildings and properties. The county implemented this plan using various revenue-generation methods and financing techniques.

The lessons from this approach and some of the financing tools used by Yolo County can be leveraged by other local jurisdictions interested in innovative financing for solar installations.

Yolo County Project Objectives

Create revenue for each year of the systems’ operation

Implement projects that required no up-front capital investment

This clean energy project made Yolo County the first California County to

Be grid positive (over produce energy, which is sold back to the utility)

Completely eliminate its electric bill

Implement bill crediting on this large a scale

To reach its goal, Yolo County selected appropriate utility tariffs as means to generate revenue for the county and to install the greatest amount of solar generation capacity possible.

Yolo County determined the appropriate system sizes to qualify for Pacific Gas and Electric’s (PG&E) fast-track interconnection process, which eliminates the need for expensive and time-consuming engineering reviews. After determining system sizes and locations, the county then executed multiple low-cost financing mechanisms to fund the system costs.

The county’s solar future is further enhanced by the Climate Change Compact of Yolo County, a forum for cities, schools and districts to share information about what each jurisdiction is doing to promote community energy sustainability.

Municipal Solar Financing Programs and Tariffs

Financing Programs

Tax-Exempt Lease Purchase (TELP)TELPs allow a public sector organization to borrow large sums of money from the capital markets to finance major capital projects without having to issue municipal bonds. When properly structured, this type of financing mechanism allows public sector agencies to draw on dollars saved from future utility bills to pay for new, energy-efficient equipment today.

Eligible public entities: cities, counties, public care institutions, public hospitals, public schools and colleges, special districts

On-Bill Financing (OBF)OBF helps municipalities finance qualifying energy efficiency projects. Qualifying entities can fund energy efficiency projects for zero interest, no fees and repay the loan in monthly installments that are added as a line item on a utility bill. In California, OBF is eligible to nonresidential customers of the investor-owned utilities (IOUs): PG&E, SoCal Edison, SoCal Gas and SDG&E.

Eligible customers: business, federal, state, county or local government agencies

Energy Project Lease FinancingThis flexible low-interest loan from a private lender can be used in conjunction with other utility or public financing, rebates and incentives to finance energy-efficiency, water-saving and renewable energy projects. Minimum loan is $250,000, but multiple projects can be bundled under a single loan with no up-front capital needed.

Eligible public entities: cities, counties, public care institutions, public hospitals, public schools and colleges, special districts

California Lease Finance Program (CaLease)CaLease allows local agencies to finance equipment through multiple funding institutions who competitively bid on their project. This comprehensive lease management program allows local governments the ability to bid and manage leases without dedicating significant staff time to the process.

Eligible public entities: local agencies (other than state agency, board or commission)

Tariffs

Net Energy Metering (NEM)NEM is available to all utility customers who install eligible renewable generation projects of 1 MW or less. NEM allows customers to receive the full retail rate for generation that offsets energy load and may be expanded to cover excess generation through a bill credit. The credit offsets the customer's electricity costs incurred when the system’s renewable resource is unavailable.

Eligible customers: Available in all utility service areas in California

Renewable Energy Self-Generation Bill Credit Transfer Program (RES-BCT)RES-BCT is a tariff mechanism that allows local governments or campuses located in IOU service areas to apply excess renewable energy produced from a customer account as energy credits on another of its metered accounts.

Eligible public entities: cities, counties, campuses, special districts, school districts, political subdivisions or other local public agencies

Yolo County Municipal Solar Projects

Site Profile6.8 MW installed on three sites

Project Financing$23 million of zero-capital investment$60 million of projected revenue over 35 yearsElimination of $1.4 million annual electric billProduction of 152% more energy than used (extra sold back to utility)Over $400,000 annual positive cash flow

Environmental Benefits1225,000 tons of CO2 emission avoidedEliminates the equivalent of 50,000 passenger carsEquivalent to carbon sequestration of 6.4 million tree seedlings over 10 yearsSaves the same electricity as used by 20,000 homes